The Office for National Statistics (ONS) recently released revised data showing that the UK economy experienced a much faster growth rate in 2023 than initially estimated. The economy expanded by 0.3% last year, three times the previously reported growth of 0.1%. This upward revision was attributed to the collection of more detailed data on wages and corporate profits, providing a more accurate picture of the economic landscape.
Despite the positive news of the revised growth rate, the UK remained one of the slowest-growing economies within the G7 group of nations. Only Germany fared worse by contracting 0.1% during the same period, underscoring the challenges faced by the UK economy. The improved economic outlook fueled criticism of the Labour government's claims of inheriting a dire economic situation from the previous Conservative administration, especially as the revised GDP figures for the second quarter of 2024 showed a slight decrease to 0.5%.
Looking ahead, the Organisation for Economic Co-operation and Development (OECD) forecasts a modest recovery for the UK economy, predicting a growth rate of 1.1% for the year. Gora Suri, an economist at PwC, highlighted the positive aspects contributing to this outlook, such as lower inflation, declining interest rates, and increased political stability post-general election. Despite this, challenges persist, as real GDP per head saw a modest increase in the three months to June but remained lower than the previous year. Additionally, disposable incomes rose by 1.3% in the second quarter, though slightly lower than the previous quarter's increase of 1.6%.
The revised GDP figures for 2023 and 2024 incorporated new annual survey data, VAT returns, and updated industry size estimates, providing a more comprehensive view of the UK's economic performance. However, concerns have been raised about the accuracy of the data, particularly regarding the UK's recovery post-Covid, and labor market data due to declining survey response rates.